Filing bankruptcy is not at all an easy task. There is so much more to be considered that, it becomes hard for you to file one, without having the details on the same. Furthermore, you will have to consider the process which you may have to follow, in order to file bankruptcy. Now, if you are planning to file bankruptcy under Chapter 7, you will have to know all of the details in relation to it. You may also be required to take the help of a Chapter 7 bankruptcy attorney.
Things to know about Chapter 7 bankruptcy
There are various important things which you will have to know, in order to make sure that you aren’t making a mistake in filing Chapter 7 bankruptcy. In case of Chapter 7, you lose almost all of your assets in the process of getting a discharge, from all of your debts. Therefore, you will have to:
1. Get the details of Chapter 7 bankruptcy – You need to get all kinds of details on Chapter 7 bankruptcy. Chapter 7 bankruptcy is known as the liquidation process, where the bankruptcy trustee liquidates all of your assets. This is done in order to pay your creditors and lenders, for you do not have the money to pay them.
2. Opt for credit counseling – If you are going to file bankruptcy, it is important for you to obtain a credit counseling session. In case of Chapter 7 bankruptcy, it is a must. So, it would be better for you to get a credit counseling done, before filing Chapter 7.
3. Determine if you are eligible for Chapter 7 – You will have to determine if you are at all eligible to file for Chapter 7 bankruptcy. Not all are eligible to file under Chapter 7. You will be required to apply for Means Test. If your income is more than that of the average income of the state you are in, you may not be allowed to file under this Chapter. Your income will have to be lower than the average income of the state you are in.
4. Can you part with the assets – You will have to determine, if you are ready to part with your assets and belongings. As Chapter 7 is a liquidation process, you will have no option to save the assets. The bankruptcy trustee will take away your assets, sell those off to use the cash for making the payments to your creditors. In fact, all of your assets may be liquidated. Still, it depends on the debt amount you owe, to your creditors.
5. Can you afford the cost of bankruptcy – You will have to find out if you can at all afford to make payments, against the cost of bankruptcy. Filing bankruptcy can cost you quite an amount, and it may not be possible for one and all to afford the same. A person already in financial hardship, may not have the money to file bankruptcy. So, the cost of bankruptcy is quite an important issue.
6. Bankruptcy’s effect on credit – You need to consider the effect of bankruptcy on your credit. It has a hugely negative effect on your credit score. It can lower your credit score in the range of 200-350 points. So, getting back in the right form is going to take time. It won’t be possible for you to obtain any form of new credit, immediately after bankruptcy. It may take you more than 2 to 3 years to get back on track.